SHANGHAI: China’s yuan eased against the US dollar on Wednesday, hovering near a 4-month-low, as the country’s industrial profits extended declines in October, and as investors weighed the potential impact of new US tariffs.
Profits in October fell 10% from a year earlier, following a 27.1% slump in September, official data showed on Wednesday, as demand remained soft in the $19 trillion economy.
Spot yuan opened at 7.2460 per dollar and was last trading 58 pips lower than the previous late session close at 7.2561 per dollar as of 0301 GMT and 0.8% weaker than the midpoint.
Globally, the dollar steadied on Wednesday, struggling to extend gains after a spike triggered by US President-elect Donald Trump’s threat on Monday to impose tariffs on Mexico, Canada and China.
Trump said that he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China once he assumes office in January.
“Watch any headlines from Commerce Secretary nominee Lutnick as closely as you would headlines from Trump. Lutnick, while likely to support Trump’s tariff agenda, will hold the key to tariff implementation,” said Citi analysts in a note.
“Remind that he will likely be a China hawk, keeping USD/CNH on an uptrend.”
During Trump’s first term as president, the yuan weakened about 5% against the dollar after the initial round of US tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.
The minutes of the US central bank’s November meeting released on Tuesday showed many policymakers in agreement that it was appropriate to reduce policy restraints gradually.
Prior to the market opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1982 per dollar, 553 pips firmer than a Reuters’ estimate.
The offshore yuan traded at 7.2644 yuan per dollar, down about 0.08% in Asian trade.
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